Woodway Furniture manufactures computer desks. The company uses activity-based costing. Its activities and related data follow.

Woodway produced two styles of desks in April: the standard desk and an unpainted desk. Data for each follow:

Requirements 

1. Compute the per-unit manufacturing product cost of standard desks and unpainted desks.

2. Premanufacturing activities, such as product design, were assigned to the standard desks at \(\$ 5\) each and to the unpainted desks at \(\$ 3\) each. Similar analyses were conducted of post manufacturing activities such as distribution, marketing, and customer service. The post manufacturing costs were \(\$ 25\) per standard desk and \$22 per unpainted desk. Compute the full product costs per desk.

3. Which product costs are reported in the external financial statements? Which costs are used for management decision making? Explain the difference.

4. What price should Woodway's managers set for standard desks to earn a S42.00 profit per desk? 

Transcribed Image Text:

Activity Materials handling Assembling Painting Budgeted Cost of Activity Allocation Base $ 300,000 Number of parts 2,500,000 Direct labor hours 170,000 Number of painted desks Cost Allocation Rate $ 0.60 15.00 5.00